A brief list of changes:
Exit as planned on DUST. Stop was hit
Trader’s discretionary exit on DUG: Gain ~ 4.80%
Entered short IBB via LABD (3X inverse) and BIS (2X inverse). Not advice, not a recommendation.
The biotech sector has lost momentum.
Weekly MACD has diverged and is now flat. Additional analysis to come.
Position table is shown below:
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The downward thrusts in the dollar have run their course.
The weekly chart of UUP, shows successive narrowing of distance traveled to the downside.
The bears may have reached exhaustion at the same time MACD shows a bullish divergence.
Couple that with extreme shorting from the speculators; the trap is set, ready to close.
From a technical perspective, note last week’s price action was inside and at the top of the price range from the week prior.
Looking at the week before that, we see price action was inside but at the bottom of the range of the week prior.
These are subtle clues; there’s a change in character.
As mentioned in previous updates, it’s all happening during holiday weeks when everyone (almost everyone) is distracted.
No matter what happens on the political side, it’s likely to be chaos. February, is setting up to be very different from now.
We’re using Livermore’s strategic approach to the markets. That is, figure out what’s going to happen in a big way … then get in position.
Built into that approach is recognition there will be market outages, trading halts, communication interruptions and natural disasters.
The one thing that may separate this site from others, these (potential) events are taken into account.
Seismic activity is picking up in a big way right along with volcanic eruptions. A major eruption that will block the sun and kill-off global harvests or planting, may be in the works
The “Christmas Bomb” cut communication lines … which by the way is the very first objective during any battle; cut the enemy’s communications.
Matter of fact; that could be the ‘reason’. A test to see how badly communications were disrupted; how quickly they recovered.
Continuing on with potential disruptive events; There were broker outages on November 9th, when the market opened sharply higher.
If it happens on the way up, it will happen on the way down.
Cyber attack has already been stated as the next gala event the elite have planned.
There’s not one market analysis site known to this firm addressing those potentials or any others.
In that sense, The Danger Point, is unique.
Obviously, there are no guarantees. Anything can happen. If one wants to day-trade, go ahead but we’re not interested.
When or if all this (or a variant of it) happens simultaneously, the general pubic is going to be stunned.
It’s possible they will see their investment accounts wiped out in a matter of weeks.
The positions remain unchanged and listed below. The look is different as it’s taken from the firm’s own trade spreadsheet. Absolutely not advice and not a recommendation.
Note the initial stop followed by the current stop.
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As expected, this morning’s GDX action is testing yesterday’s wide price bars (shown on hourly chart).
The daily chart of inverse fund DUST is below:
The last report was posted a few hours before close. Afterward, GDX pushed slightly lower towards the bottom range of support.
That push lower in turn, lowered the retrace targets accordingly.
This morning’s upward GDX spike was a gift (as of 10:51 a.m EST) and a signal to go short via DUST (not advice, not a recommendation).
It’s important to note that all of this action is taking place during Christmas week; no one is looking.
The firm went short GDX at DUST: 20.09, early in the session. Hard stop for DUST @ 19.69; not advice, not a recommendation.
Price action pushed slightly lower (to DUST 19.91, so far), before reversing.
This is the danger point. If the hyper-inflationists are right, it won’t take much of a move in GDX, to find out.
If we are in a deflation scenario, expectations are for today’s test levels to hold and for GDX to continue lower (DUST higher).
Separately, XOP is testing and filling the gap left from Monday’s open.
If XOP reverses from here, the DUG stop could be moved up to today’s low (thus far) at DUG: 27.75.
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There’s something very wrong with the “hyperinflation” narrative.
The gold miners GDX can’t even get to a full 38% retrace level without collapsing.
Price action has negated the targets from the prior update.
It should be clear at this point, a monstrous 5,600 page, so-called stimulus package is not inflationary.
For an irreverent look at what’s in that bill, reference “Salty Cracker”.
By the way, just how long does it take to write 5,600 pages? A couple of years, maybe?
Probably as much time as it took to write the original CARES Act … which was submitted (put in committee) to Congress during January 2019 … a full nine months before anyone even heard of the “speck” in Wuhan.
The inference is, both of these bills were planned long ago and have been in the works for years.
Which brings us to gold and the miners.
The hourly chart of GDX shows two wide bars in today’s session. The 35.00 – 35.50, area is support that may stop the down move for now.
Wide price bars usually get tested. Today’s action (as of 1:34 p.m. EST) shows GDX is moving quickly.
Expectation now, is for GDX price action to test the wide bars. That could take hours or days … or not at all.
If there is a test, the most likely stopping point is yesterday’s low at GDX, 36.18
In other markets, the short position in XOP (via DUG) is being maintained. Stop has been moved to DUG, 26.63; not advice, not a recommendation.
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If GDX continues in counter-trend action, an equal distance wave ‘c’ is the area GDX, 37.80.
Fibonacci Day 21 from the lows in late November, puts the counter-trend top on or about, December 23rd.
With the stimulus bill essentially a sure thing and gold going nowhere, something else behind the scenes is happening.
We’ll stick with the Van Metre assessment that stimulus is deflationary; Until proven otherwise.
From ‘uneducated economist’, linked here, he proposes there’s slight of hand going on yet again. The inference is, that somehow holding the actual physical cash note may (not advice, not a recommendation) become very important.
Following up on his comment is this: There’s a limited amount of actual physical currency in circulation as detailed here.
So worthless paper fiat currency, in an ironic twist, might become valuable for a short period of time … yet to come.
The job of this firm is not to figure out the nuances and details of the Fed.
The job is to identify probability and opportunity; then take advantage. Interpreting price action takes decades to master … it’s a full time job in itself.
With that in mind, we’re currently short (not advice, not a recommendation) Oil & Gas via DUG.
The senior miners are on track to test the 37.50 – 38.00 area. GDX will be monitored if/when it rises into that level. If so, it could be another low risk short opportunity.
Stay Tuned
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Last Monday’s update on the Oil & Gas sector ETF, showed it at a confluence of trend-line resistance.
Short positions had been established during that week (on 12/8 and 12/9) using inverse fund DUG; not advice, not a recommendation
Now, we see confirmation of the confluence.
XOP reversed right at trend intersection.
Doing so, validates those resistance areas.
If the XOP reversal continues, next step is maintain short while determining the market’s own time frame for decline.
That means going through charts of XOP, selecting Daily, 2-Day, 3-Day charts and so on, until the best price action correlation to time, is observed.
The last major down-leg in XOP, lasting from January 8th to March 19th was best represented using a 7-Day chart.
Setting stops on the way down (DUG up) using the 7-Day, would have allowed the majority of the move to be captured.
Low-to-high on DUG from January 8th to March 19th, was 37.48 – 184.95; a gain over 393%.
Stay Tuned
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The dollar’s at multi-year lows.
Oil reaches new recovery highs along with S&P, Nasdaq.
So, what does XOP, do? Nothing.
Price action ended essentially unchanged.
The positive market bias along with extremes in opposite directions for the dollar and oil should have done something, right?
“Should” is a word never to use in any market analysis. What ‘should’ happen rarely happens and usually, it’s the opposite.
XOP reached its high last week at the same time huge volume was moving into the inverse fund, DUG.
This week, is lower XOP action that looks about ready to roll over.
The market itself has shown where to go for the short side. It’s the one sector that appears ready to move lower.
The position in DUG is being maintained (not advice, not a recommendation). Because of today’s tight action, the stop remains at DUG 24.72.
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That’s part of the title from the Energy Sector report, linked here.
Those exact words were used just hours prior, in the pre-market update.
“Downward pressure is increasing.”
The short position in the sector is being maintained via DUG (not advice, not a recommendation).
The stop is set to be moved after today, based on price action.
Using USO as the proxy, oil is pushing a little higher as of this report (12:41 p.m., EST) probably because the dollar’s probing new lows.
Even though the dollar’s at lows, action thus far is reversal. A UUP close above 24.38, may signal trouble for those that are short.
The markets continue to be stretched to extremes. Based on data thus far, Energy Sector appears to be reversing (again) first.
Since that sector’s in a long term down-trend, XOP reaching its highs way back in June of 2014, we’ll remain focused on DUG.
Thrust energy in Oil & Gas sector XOP, continues to erode.
The weekly chart of XOP, has the longer term view … including the confluence of trend-lines; another factor.
Now on the daily, it too is losing power. Force Index (bottom of chart) has successive lower highs and on Monday, a lower low as well.
Downward pressure is increasing.
The EIA report is released at 10:30 a.m. EST. We’ll see if there’s another inventory build.
The firm is currently short this market via DUG (not advice not a recommendation). Hard stop: DUG, 24.72
There’s some level of protection (against volatility) with DUG reaching an apparent low last week and XOP making its high.
Moving on to Gold: GLD, GDX, DUST
Pre-market shows gold flat and the miners (GDX) trading slightly higher; still on track to the target in this update.
If and when targets are reached, we’ll assess whether or not a low risk (short) position is available via DUST.
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The first hour is over: XOP (Oil & Gas) posted a new daily low.
Correspondingly, inverse fund DUG has posted a new daily high.
This is now, potentially a very dangerous juncture in the markets.
The firm is fully positioned (not advice, not a recommendation) in DUG.
Wyckoff analysis directives concerning bear markets, were used to identify (at this point) the single position.
More specifically, those directives are to identify the weakest market(s) not the strongest.
It’s the weak markets that will go down farther and faster during mark-downs (or bear phases).
Through a process of iteration (lasting months) as detailed in these updates, the weakest market up to now, has been identified and short positions opened via DUG.
Based on today’s action thus far, we have a hard stop in DUG which is the session low: DUG @ 24.727.
It’s unlikely price action will return and penetrate that (24.72) low.
The firm uses trading tenets from three market masters as detailed here.
There are essentially two main tenets from the late Gerald M. Loeb (former Vice Chairman of E. F. Hutton) and those are:
First:
Significant market opportunities are rare. When one is identified, use it to its maximum extent.
Second:
Do not diversify. Diversification is for those who don’t understand market behavior. Diversification is for the average … the mediocre.
That last admonition is harsh indeed. However, it’s backed by evidence from the top traders. Over and over we see their positions (detailed in the press after the fact) were highly concentrated.
Of course, none of the above is a recommendation.
In the next instant there could be an event which completely turns around the oil sector’s fundamentals … like a major earthquake taking out millions of barrels of supply.
As we have seen with seismic activity increasing dramatically, that scenario is not too far fetched.
At this point, we’re positioned in DUG. Hard stop, DUG 24.73
Stay Tuned
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The Danger Point® 